Divorce and your home

Before getting married it’s important to protect your most valuable asset. For couples tying the knot it’s the matrimonial home. Although divorce rates are down from their peak in the 1980’s, four in 10 first marriages that took place in 2004 will have ended in divorce by 2035, according to Statistics Canada. That’s an alarming figure! That’s why it’s important to plan for the possibility that you might part ways with your spouse before death.

Net Family Property

When a marriage comes to an end in Ontario, the financial contributions of each partner made during the marriage is acknowledged. The law says that “the value of any kind of property that was acquired by a spouse during the marriage and still exists at separation must be divided equally between the spouses.” That’s not all, the law also says, “any increase in the value of property owned by a spouse at the date of marriage must be shared.”

In a perfect world each spouse would own an equal share of property. Unfortunately, we don’t live in a perfect world – more often than not, the property will need to be divided. When one spouse owns more property than the other or property is owned jointly, an equalization payment must be made; this is called the equalization of net family property.

“net family property” means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting,

(a) the spouse’s debts and other liabilities, and

(b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage; (“biens familiaux nets”)

The valuation date is often the date the divorce is granted, but not always. The Family Law Act defines the Valuation Date as:

“valuation date” means the earliest of the following dates:

The date the spouses separate and there is no reasonable prospect that they will resume cohabitation.

The date a divorce is granted.

The date the marriage is declared a nullity.

The date one of the spouses commences an application based on subsection 5 (3) (improvident depletion) that is subsequently granted.

Excluded Property

While there are some possible exceptions to the rules, the matrimonial home isn’t one of them. Gifts and inheritance received during your marriage from someone besides your spouse are normally considered excluded property. However, if the gifts or the gifts or inheritances were used towards the matrimonial home the exclusion may no longer applies.

Married vs. Common-Law

While couples who are married and common-law may share a lot of the same rights, the division of property isn’t one of them. The equalization of net family property only applies to married couples. If you’re in a common-law relationship, you don’t get an equalization payment. That means you aren’t automatically entitled to half of the matrimonial home if it was owned by your spouse before your marriage. However, if you’re in a common-law relationship and you contributed financially (for example to the repairs and maintenance of the property), you may be entitled to a payment for your contributions.

The Matrimonial Home

As the age old adage goes, home is where the heart is. When a marriage comes to an end, a lot is a stake. Not only is a home a valuable asset, it has sentimental value; it’s the place where you raised your children. Both partners must decide what to do with the matrimonial home.

(1) Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home. R.S.O. 1990, c. F.3, s. 18 (1).

When you’re a married couple, you both have the right to remain in your home; the only exception is if a judge orders a partner to move out. Since you both have the legal right to stay put in your home, you’re not allowed to sublet it, rent it, sell it or mortgage it without your spouse’s permission. This holds true even if only one spouse’s name is on the deed to the home.

Staying in the Matrimonial Home After Divorce

Even when you separate, both your spouse and you have the right to remain in the family home. If your separation is less than amicable, you may need to get lawyers involved. Lawyers cost a pretty penny; unless you enjoy paying costly legal fees, it’s usually best to only get lawyers involved when absolutely necessary.

If you want to stay in the family home, you’ll need to obtain a court order or agreement that specifies the matrimonial home as an exclusive possession. In this case, one spouse can stay put, while the other has to find a new place to live.

If you have children, often times the spouse with custody of the children will want to remain in the matrimonial home. Unfortunately, staying put in the matrimonial home can prove costly. Divorce is a traumatizing experience for children; staying in the family home is one way to ease your children into the new living arrangement.

Oftentimes neither partner can afford the matrimonial home. In that case, you may decide to sell the family home and downsize to a more modest home or condo. If you don’t have enough of a down payment, you may decide to rent.

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